Appeal from the Circuit Court of the United States for the Southern District of Mississippi.

Edward Mayes and Caruthers Ewing, for appellants.

Le Roy Percy and R. B. Campbell, for appellees.

Before PARDEE, MCCORMICK, and SHELBY, Circuit Judges.

SHELBY, Circuit Judge. This suit was brought in the court below by the appellants against the appellees, and the jurisdiction of the court is shown by proper averments of the diverse citizenship of the parties. The Circuit Court sustained a demurrer to the bill and dismissed it. To show the questions raised by the appeal, it is necessary to make a condensed statement of the material averments of the bill. On and before February 1, 1891, Joseph Wilczinski owned in fee simple the Matilda plantation, lying in Washington county, Miss., and containing 1,534 acres. On that day, he and Julia Wilczinski, his wife, executed a deed of trust to Charles C. Currier, as trustee, to secure several promissory notes, amounting in the aggregate to $35,000, payable to the Alliance Trust Company, Limited, a corporation under the laws of Great Britain. The last one of the notes was due January 1, 1896. The deed of trust conferred the usual power on the trustee to sell the mortgaged property in case of default in paying the notes. In case of the refusal of the trustee to act, it was provided that the Alliance Trust Company and their legal representatives might appoint a trustee to act in place of Currier. Currier resigned his office of trustee January 3, 1898. H. C. Williamson was thereupon appointed trustee by A. S. Caldwell, as attorney in fact for the Alliance Trust. Company; the appointment being made after the death of Joseph Wilczinski, the mortgagor. Williamson, the substituted trustee, advertised and sold the lands under the deed of trust, and James Haggart and William McMaster bid $35,000 for the same, buying it, in fact, for the Alliance Trust Company. At that time there was due on the mortgage, including interest, $44,027. The $35,000 so bid was treated and held by the Alliance Trust Company as a credit on the mortgage. In 1902, Haggart and McMaster conveyed the land to James A. Crawford, who, during the same year, conveyed it to the Citizen's Bank, a corporation under the laws of Mississippi, and the bank conveyed it to B. R. Allen. These several deeds, made subsequent to the foreclosure sale, contained warranties of title. Each of the subsequent vendees paid in money or in notes $35,000 for the land. After James Haggart bid for the land, he died, and his heirs at law are made parties complainant.. When Williamson, as trustee, made the sale, Wilczinski's several children, who succeeded to his interest in the land at his death, were infants, and two of them are infants yet.

In 1903 B. R. Allen brought suit in the chancery court of Washington county, Miss., against Joseph Wilczinski's heirs, the Alliance Trust Company, James Haggart, William McMasters, and others, seeking to have his title confirmed and the title of the Wilczinski heirs canceled as a cloud on his title. The defendants demurred to

the bill, raising the question of the validity of the sale made by Williamson as substituted trustee. Thereupon Allen amended his bill, adding a prayer to be subrogated to the rights of the Alliance Trust Company under the deed of trust, and for a foreclosure. The Wilczinski heirs demurred to that part of the bill only which asserted title in Allen. The demurrer was sustained by the chancery court, and the decree was affirmed by the Supreme Court of Mississippi. These decisions were to the effect that A. S. Caldwell had no authority to appoint a trustee in the place of Currier, who resigned his trust, and that therefore the sale made by H. C. Williamson, substituted trustee, was void. In brief, the holding was that Allen had no title, for he deraigned title from Williamson's sale. The court, after disposing of the main question as to the legality of Allen's title, used this language:

"Of course, the appellant (meaning the Wilczinski heirs) must do equity if he seeks equity, and, just as certainly, he would be estopped to set up any statute of limitation against the enforcement of the claim, and the appellee (meaning the Alliance Trust Company) has nothing still to do except to enforce its security in the proper way." Allen v. Alliance Trust Co. et al., 84 Miss. 319, 331, 36 South. 285, 287.

Upon the rendition of the decision by the Mississippi Supreme Court that he had no title, Allen “announced his intention to abandon the said plantation and insist upon the covenants of warranty against the bank, and dismissed his bill brought in the chancery court." The amount now due on the mortgage, disregarding the credit of $35,000, the amount of the bid for the land at the foreclosure sale, is over $70,000. The bill in the case at bar, after stating the foregoing facts, concludes with a prayer for an accounting, for a judicial foreclosure of the mortgage, and for general relief. To this bill, the heirs at law of Joseph Wilczinski, deceased, demurred, assigning as causes of de

murrer:

"(1) That, treating said amended bill as seeking to foreclose the mortgage therein mentioned, it appears by said amended bill that the cause of action, and the right to foreclose said mortgage, did not accrue within six years be fore the commencement of this suit, and that said plaintiffs are barred from any relief by the statute of limitations of the state of Mississippi, in such cases made and provided, notwithstanding the alleged declaration of the Supreme Court of the state of Mississippi that the Alliance Trust Company could still proceed to enforce its mortgage in the proper way, as alleged in said amended bill, since it appears from the exhibit to said amended bill that said declaration of the Supreme Court was obiter dictum, and not an adjudication of any issue before the court.

"(2) That, treating said amended bill as seeking to cancel the title of these defendants to the lands described as a cloud on plaintiff's title, it appears by said bill that the plaintiffs have no such title or interest in said land as to enable them to maintain this suit; but, on the contrary, it appears by said amended bill and exhibits thereto that the title to said land has already been adjudicated between the parties to this suit by the Supreme Court of the state of Mississippi as being the demurrants. Therefore plaintiffs are not entitled to the relief sought, or to any relief."

The Circuit Court sustained this demurrer and dismissed the bill. The complainants appeal to this court, and assign the decree of the Circuit Court as error.

We are advised by counsel for appellants, in their printed statement and argument filed in this court, that, "on the decision of the Supreme Court of Mississippi that the sale was void, the property was reconveyed to appellants and the successive warranties made good." We do not find in the record any deed from Allen to appellants, but, as Allen is made a party defendant as interested in the accounting, the facts as to the character of his further interest in the case, if any, may be shown in the progress of the suit. Allen is a citizen of Mississippi, and several other defendants being citizens of that state, if it appeared that he was a necessary party complainant, it would defeat the jurisdiction of the Circuit Court. It is sufficient to say that, even without the conveyance referred to by counsel, it does not appear on the record before us that Allen is a necessary party complainant.

Notwithstanding the sale made by the substituted trustee was held void, the Supreme Court of Mississippi declared that the mortgage could be foreclosed "in the proper way," and that the mortgagor's heirs "would be estopped to set up the statute of limitations against the enforcement of the claim." The appellees insist that this part of the court's opinion is a mere dictum, and an able argument is presented to show that the doctrine of estoppel is not applicable to the case; the estoppel deniers being infants and not having in any way ratified the appointment of the substituted trustee or the sale made by him. It is claimed by the appellants that this part of the opinion is not a dictum, and that there are analogous decisions of the same court that tend to support the view that the doctrine of estoppel is applicable. The cases. cited are Sugg v. Thrasher, 30 Miss. 135; Work v. Harper, 31 Miss. 107, 66 Am. Dec. 549; Davis v. Hoopes, 33 Miss. 173; Wilkinson v. Flowers, 37 Miss. 579, 75 Am. Dec. 78; Marshall v. Minter, 43 Miss. 666; Staton v. Bryant, 55 Miss. 261; Barnett v. Nichols, 56 Miss. 622; Kelly v. Wagner, 61 Miss. 299; Matthews v. Matthews, 66 Miss. 239, 1 South. 741; Lucas v. American, etc., Mortgage Co., 72 Miss. 366, 16 South. 358; and Easter v. Riley, 79 Miss. 625, 31 South. 210. Under section 4381 of the Mississippi Code of 1892, a copy of this opinion was certified to the Washington county chancery court, and it cannot be doubted that, if Allen had not dismissed his bill, and the Alliance Trust Company by cross-bill in that case had sought to foreclose the mortgage, the chancery court would have been governed by the opinion to the extent that the statute of limitations would not have been regarded as preventing the foreclosure of the mortgage in the proper way. The Supreme Court had held, on the appeal from the 'interlocutory decree sustaining a demurrer to part of the bill, that the attempted foreclosure by the substituted trustee under the power of sale was wholly ineffectual. The case remained in the chancery court for further proceedings pursuant to the opinion, and such proceedings were to be had on a bill containing a prayer for foreclosure. In a case in which the right to foreclose the mortgage was asserted, the Supreme Court made the decision in question. The substance of the thing adjudged on this point was that the statute of limitations could not be used to prevent the foreclosure. We should not turn from the substance of what was said to look too closely at one reason given

for saying it. If the statute of limitations is not a defense under the circumstances of the case, that fact is conclusive of the question presented by this appeal, no matter by what process of reasoning that conclusion is reached. The ultimate question, therefore, we are called on to decide in this case is whether or not the statute of limitations bars the rights of the complainants asserted in the bill.

Before we examine the statute of limitations in question, it will be well to consider the legal and equitable relations of the parties, for a knowledge of these relations will shed light on the question when we come to examine the statutes. The sale under the mortgage by the substituted trustee having been ineffectual and having been declared void, it is not denied that the position of the complainants is, in substance, that of mortgagees in possession. Cooke v. Cooper, 18 Or. 142. 22 Pac. 945, 7 L. R. A. 273, 17 Am. St. Rep. 709. The settled law of a state on the subject of mortgages is regarded as a rule of property, and the federal courts are governed by the statutes and decisions of the courts of last resort in the state where the property mortgaged is situated, and where the controversy arose. Parker v. Dacres, 130 U. S. 43, 9 Sup. Ct. 433, 32 L. Ed. 848; Bacon v. N. W. M. L. I. Co., 131 U. S. 258, 9 Sup. Ct. 787, 33 L. Ed. 128; Dugan v. Beckett, 129 Fed. 56, 63 C. C. A. 498.

In Mississippi, the mortgagor is the owner of the legal title to the land until a valid foreclosure of the mortgage. This is true against everybody, but subject to this exception: After breach of the condition of the mortgage, the mortgagee may maintain ejectment against the mortgagor to recover the mortgaged land as a means of enforcing the security. Buckley v Daley, 45 Miss. 338; Freeman v. Cunningham, 57 Miss. 67. It follows, we think, that where a mortgagee obtains possession by suit, or under an irregular, or voidable, or void, foreclosure, after breach of the condition of the mortgage, he has the right to hold possession until his mortgage is paid. The mortgagor cannot deprive him of possession without first paying the debt. Bryan v. Brasius, 162 U. S. 415, 16 Sup. Ct. 803, 40 L. Ed. 1022; Helm v. Yerger, 61 Miss. 44, 51; Buckley v. Daley, supra. We have no reason to doubt that this doctrine prevails in Mississippi although it may be that the mortgagee under such circumstances, if sued in ejectment by the mortgagor, would have to resort to a court of equity to preserve his possession till his mortgage was paid. Bonner v. Lessley, 61 Miss. 392. This rule, that the mortgagee cannot be deprived of possession by the mortgagor till the debt is paid, is applied in cases where the debt secured by the mortgage is barred by the statute of limitations. Bryan v. Brasius (Ariz.) 31 Pac. 519; Id., 162 U. S. 415, 16 Sup. Ct. 803, 40 L. Ed. 1022. This may be true generally on the theory that the statute operates alone on the remedy, not extinguishing the debt nor the lien (Angell on Limitations [6th Ed.] § 73), but we must keep in mind that in Mississippi the completion of the period of limitation defeats and extinguishes "the right as well as the remedy." Code Miss. 1892, § 2755.

The bill shows that the land was bought at the foreclosure sale by Haggart and McMaster for the Alliance Trust Company; their bid

being $35,000 and more than $44,000 being then due on the mortgage under which the sale was made. This bid has ever since been treated by the Alliance Trust Company (at least, till the sale was held void by the Mississippi Supreme Court) as a credit on the mortgage debt. Possession of the land has been held continuously under this sale. The validity of the sale was never ratified by the Wilczinski heirs, nor was it ever openly repudiated until after the expiration of the period of limitation, when Allen filed his bill in the state chancery court. That court held, and the Supreme Court approved the decision, that the foreclosure sale was void, and that Allen could acquire no title from those who purchased at that sale. The Mississippi Supreme Court used the expression that the sale was "absolutely void," but the point passed on was raised by a demurrer to the part of the bill that alleged title in Allen, so the decision was to the effect that the sale and conveyance by the substituted trustee was "absolutely void" as an attempted transfer of the title to the land.

The word "void" is so often used in the sense of "voidable" as to have almost lost its primary meaning, and, when it is found in a statute or judicial opinion, it is ordinarily necessary to resort to the context in order to determine precisely what meaning is to be given to it. The word, when confined to the effect of the sale and conveyance as a transfer of title, the matter under consideration, was used by the learned Supreme Court with accuracy and technical precision. A purchase by a trustee at his own sale is certainly void as to the beneficiary in the trust. It is void because the seller is not permitted. to buy at his own sale. Michoud v. Girod, 4 How. 503, 11 L. Ed. 1076. The word "void," however, is frequently used even by legal writers and jurists where the purpose is nothing further than to indicate that a contract. is invalid and not binding in law. Ewell v. Daggs, 108 U. S. 143, 148, 2 Sup. Ct. 408, 27 L. Ed. 682. The distinction between "void" and "voidable" in their application to contracts is sometimes one of practical importance. A transaction may be void as to one party, and not as to another. When entire technical accuracy is desired, the term "void" can only be properly applied to those contracts that are of no effect whatsoever, mere nullities, such, for example, as are against the law, illegal, or criminal, or in contravention of that which the law requires, and therefore incapable of confirmation or ratification. Allis v. Billings, 6 Metc. 415, 417; 39 Am. Dec. 744; Lawrence v. Hornick, 81 Iowa, 193, 46 N. W. 987, 988; Toledo, St. L. & K. C. R. Co. v. Continental Trust Co., 95 Fed. 497, 525, 36 C. C. A. 155. The sale by the substituted trustee, while it had no effect on the title, was not a transaction entirely incapable of confirmation or ratification by the parties in interest. The Alliance Trust Company, the beneficiary in the trust, gave credit for the purchase money and held possession under the purchase. In its bill now before the court, in one of its alternative claims, it avers the legality of the sale, thereby expressing a willingness to let the sale stand. Can it be doubted that the sale could be confirmed and the credit of $35,000 on the mortgage be permitted to remain, if all parties in interest elected to let it stand? A decree ratifying the sale, rendered at the election of all parties in interest,